WU Western Union Company

By Josh Beckerman 

Western Union Co. said its fourth-quarter profit fell 4.2% and projected that currency rates will continue to hurt results in 2016.

The company expects 2016 earnings of $1.58 to $1.70 a share, including a negative effect of about 15 cents from currency and reduced hedge benefits. Analysts polled by Thomson Reuters project $1.72.

Western Union expects revenue on a constant-currency basis will rise by the low- to mid-single digits, but projects currency and lower hedge benefits will cut revenue by about $250 million.

The company also increased its quarterly dividend to 16 cents from 15.5 cents.

Western Union has faced more competition as it expands from a cash-based business to one with a more digital focus. PayPal Holdings Inc.'s November purchase of Xoom created a large global competitor in money transfer.

The company's recent digital moves include a partnership with China's Tencent Holdings Ltd. announced in November for mobile payments on the WeChat app. Last week, Western Union said it formed an alliance with mobile app provider Viber. Former Barclays PLC executive Elizabeth G. Chambers recently joined the company in the newly formed post of chief strategy and product officer.

On Tuesday, the company said consumer-to-consumer revenue increased 21% at Westernunion.com and said it made progress in digital efforts like WU Connect.

For the quarter ended Dec. 31, the company earned $212.3 million, or 42 cents a share, compared with $221.5 million, or 42 cents a share, a year earlier. Fewer shares were outstanding this year.

Revenue fell 2% to $1.38 billion. On a constant-currency basis, revenue was up 3%.

Cost-management efforts led to higher operating margins.

For the full year, revenue fell 2% to $5.48 billion and earnings excluding items were $1.67 a share. The company had projected a low- to mid-single digit revenue decline and earnings excluding items of $1.60 to $1.67 a share.

The company was in talks last year to buy Australia-based foreign exchange services provider OzForex Ltd., but negotiations ended without a deal.

Shares were up 12 cents to $17.12 in after-hours trading.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

February 09, 2016 18:17 ET (23:17 GMT)

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